Discrete Event Simulation in Supply Chain Planning and Inventory Control at Freescale Semiconductor, Inc.

Abstract

The supply chain of Freescale Semiconductor from fabrication through final test and delivery was modeled and analyzed using discrete event simulation in Arena. Freescale starts products in manufacturing based on a make-to-order and make-to-stock master production schedule. Since customer lead time is often less than the supply chain cycle time, Freescale maintains strategic safety stock throughout the supply chain and as finished goods inventory. Manufacturing entry rate is determined by the amount of product in WIP and inventory. Our analysis concentrates on the relationship between on-time delivery in the major supply chain segments and on-time delivery to the customer in an environment of significant inventory and WIP level changes. The goal is to predict the effect of internal on-time delivery, inventory and WIP changes on the customer order fulfillment service level. In our analysis, we evaluate supply chain production and inventory control policies and the impact of lead time reductions.